Mark Jegel, 28 April 2012, Week 5
"Ethical businesses have a greater probability of being more profitable than
unethical ones."
(Defending)
Introduction
“You can have everything in life you want, if you will just help enough other people get
what they want” (Ziglar, Z., 2012). If you do enough right things in life then right things will
happen in your life. Analyzing these two sayings from a business aspect we can say, "Ethical
businesses have a greater probability of being more profitable than unethical ones." That
sentence can be broken down into two parts, business ethics and profits. Business ethics are
defined as: the principles, values, and standards that guide behavior in the world of business
(Ferrell, O.C., Fraedrich, J., & Ferrell, L., 2008). Profits are defined as: returns, proceeds, or
revenue, as from property or investments (Dictionary.com, LLC., 2012).
I personally was raised to believe that good things done are like investments. The more
good things you do, the greater the Return on Investments (ROI). From a personal viewpoint,
my wife and I view our life together as a business. I’m not talking about our love for each other;
I am referring to the structure and the principles we have built our household on. We work very
hard to maintain solid ethics in our household which in-turn gives our name a solid reputation.
We work hard to be socially responsible through volunteering in our community, obeying laws,
looking out for the economy and helping out the environment whenever we can. We do these
things because we believe the ROI is extremely great as well as the longevity of return will be
great. Considering a business is made up of people, somewhat like a family, I believe these same
concepts hold true for businesses just as strongly as I do in my personal life.
Opinion
In a recent interview with Warren Buffett, the third richest man in the world and CEO of
Berkshire Hathaway, he discussed his successor and made it very known that integrity and ethics
would be the leading character traits needed by the person taking the reins of one of the elite
investment companies in the world (Buffett, W., 2011, May 7). The reputation of a company
acts as a compass directing it towards success or failure. The moral compass of a person will
direct them towards their own success or failure. Therefore, the people behind the company
determine the value of that company by the reputation it carries.
In early 2010, Goldman Sachs and Toyota were all over the news, both for ethical issues
(Tannan, A., 2010, June 14). Toyota had recently recalled over 8 million cars for failing to
manage vehicle quality. By company estimates, Toyota lost about $2 billion because of the
recalls and lost sales. Additionally, Toyota agreed to pay the Transportation Department a $16
million fine for failing to report the vehicle defect problems promptly--small change for Toyota
but a huge public embarrassment (Tannan, A., 2010, June 14). Meanwhile, Goldman Sachs
found their name tarnished even more due to extreme ($16 billion) bonuses paid out to
executives in late 2009 one year after the company received billions in bail-out money from the
government. The Securities and Exchange Commission (SEC) charged Goldman Sachs with
fraud causing the company market cap to fall by $12.4 billion as investors pulled out, not
wanting to be linked to that type of reputation (Tannan, A., 2010, June 14).
Three years ago I was an instructor for the United States Air Force teaching young Non
Commissioned Officers (NCOs) how to be better leaders. They would spend six weeks with me
as they learned leadership principles such as, Ethics, Negotiating, Leader Influence, etc. I had a
student in my class that was stationed in Colorado and came to our schoolhouse in Mississippi.
About eight months after the student graduated, one of the most impactful things happened to
me.
I have a sister that lives in Colorado. Now I have not really spoke to her in over ten
years, strictly because of geographic location and I stay very busy. However, my wife happened
to have met her through Facebook and keeps a social relationship with her as well as keeping me
informed of how she is doing. So one evening, about eight months after this student graduated,
my wife asked me if I remembered this certain student. I said vaguely and asked why. My sister
is married, therefore we do not have the same last name, but it just so happens that she went to
high school with this student of mine and they are best friends and spend all kinds of time
together. I am a little older than my sister so we were separated by five years when I was in high
school so this student of mine would not have known me, and she didn’t think much about the
last name either. So my sister is telling my wife that her friend was over to her house for dinner
and started telling my sister about this instructor she had at the NCO academy and how he made
a big positive impact on her. My sister told her that it was neat and it just so happened that her
brother was in the Air Force and that I was stationed in Mississippi. So my student asked my
sister for my name and you guessed it, it was me. Now my sister said she had heard about this
instructor off and on for eight months but never inquired more about. That day, I truly realized
how big of an impact a person’s actions and reputation can make on an organization.
So what does that story have to do with ethical business being profitable? The definition
of profit is returns, proceeds, or revenue, as from property or investments (Dictionary.com,
LLC., 2012). The positive investment that I made in that student of mine will be profitable to
my business, the United States Air Force. Considering we train, mentor and groom our own
people to replace our senior leadership, the longevity of that investment will pay dividends for
decades to come. The American people trust us to run our business of war because we have built,
lead and manage our business with principles upheld by ethics that were derived from our core
values.
Conclusion
A business’ ethics are going follow the ethics of the people that are directing or running
the company. As a Superintendent and Senior Non Commissioned Offer (SNCO) in the United
States Air Force I lead, direct, manage and influence hundreds of people. My moral
philosophies, specific principles or rules used to decide what is right or wrong, will guide the
direction of my actions (Ferrell, O.C., Fraedrich, J., & Ferrell, L., 2008). My actions, right or
wrong, good or bad, will be noticed by others. In most cases, as a leader, my actions will be
emulated by those below me in the chain of command.
It really does not matter if you are referring to a company with 200,000 employees, a
local Mom-and-Pop store in a small town or a family of two, the stability, longevity and
profitability of those organizations are going to be directly related to the ethics by which they
operate.
That is not to say that a company cannot be profitable if it not ethical. The focus for this
paper was to defend the idea that; "Ethical businesses have a greater probability of being more
profitable than unethical ones." The chances of having a greater ROI as well as securing the
longevity of a company will always go up if that company is built on and operated by sound
business ethics.
References
Buffett, W. (2011, May 7). Interview by Susie Gharib [Personal Interview]. Warren buffett: on
ethics, jobs and other stuff. Canadian Personal Finance Blog, Retrieved from
http://www.canajunfinances.com/2011/05/07/warren-buffett-on-ethics-jobs-and-other-stuffvideo/
Dictionary.com, LLC. (2012). Dictionary.com. Retrieved April 28, 2012, from
http://dictionary.reference.com/browse/profit
Ferrell, O.C., Fraedrich, J., & Ferrell, L., (2008). Business Ethics Ethical Decision Making and
Cases, Boston. MA: Houghton Miifflin Company,
Tannan, A. (2010, June 14). What's reputation worth? just ask toyota, goldman and bp.
Forbes.com. Retrieved from http://www.forbes.com/2010/06/14/bp-toyota-reputation-marketsgoldman-sachs.html
Ziglar, Z. (2012, April 28). Zig ziglar's little pdf of big quotes. Retrieved from
http://www.ziglar.com/bonuses/TheLittleBookofBigQuotes.pdf